Yellow Brick Quick #3: How to Break Bad Money Habits

On Tuesday, we showed you how to use a four-step process to create good money saving habits. But what about breaking bad ones? Author and habits expert James Clear is here to help us, yet again.

In order to break a bad habit, it’s important to reverse his four-step process in creating good habits. Therefore, we must make our bad habits invisible, make them unattractive, make them difficult, and make them unsatisfying. 

#1. Make them invisible

If we make our good money habits visible by watching our savings numbers go up through our pay stubs and Mint accounts, how are we to make the cues of our bad habits invisible? According to Clear, we must remove them.

When I drive by my favorite coffee shop on my way to work, I must stop in for a latte. In order to remove this cue, I changed my route to work and started auto-brewing my coffee in the AM. With these two strategies combined, I no longer buy coffee while on my way to work, mainly because the cue is invisible and I replaced the bad habit with a good one.

A cue for you might be getting a notification to your phone, having a coupon emailed to you, or having coupons come in the mail. You can unsubscribe from an email list at any time. Simply scroll to the bottom of an email and hit ‘unsubscribe’. There you have it! You’ve just made one of your cues invisible. If you can’t see “all the great deals”how are you going to be motivated to spend money on them?

Perhaps you follow a Pinterest or Instagram account that bombards you with messages you know cause you to fall into reckless spending. It may be time to ‘unfollow’ those accounts, quite literally. Remember, make the cues of your bad behavior invisible.

#2. Make them unattractive

One reason why we participate in bad habits is that we find them attractive. According to Clear, then, we must “Reframe our mindset. Highlight the benefits of avoiding our bad habits”.

I used to buy a soda with every meal I’d eat because I believed “they charge you for a drink no matter what”. When I met my wife (I was a naive 18-year-old), she informed me that this wasn’t true; I could order water and my bill would be a little less (sometimes $3.00 less!). She was right. Immediately, I noticed how my fast-food bill could be reduced AND I had the added benefit of no longer drinking so much soda.

My mindset shifted in two ways: I was now saving money and being a little healthier in the process. Buying a soda didn’t seem so great after this realization. The thought of spending more money plus consuming gobs of corn syrup demotivated me to participate in that habit anymore, allowing me to leave it in the rearview altogether. My wallet and blood sugar are thanking me.

#3. Make them difficult

According to Clear, we must increase the friction between us and our bad habits. Essentially, he’s saying, make it difficult to participate in them.

When we go grocery shopping, our store has a full liquor section attached to it, making it convenient to stroll over and purchase the latest IPA concoction. But remember, we need to make it difficult. By shopping at a different store (one where there is no alcohol section) we’ve increased the number of steps it would take to purchase the devil’s nectar (I just made that up). This would require us to make an additional stop while running errands, at which point we find it easier to just go home.

When I have cash on hand, I hold onto it. It physically pains me to see it leave my wallet, acting as a visual reminder that I’m losing money. But when all I have are my credit cards, I tend to swipe without a second thought. If I want to spend less, I actually just need to carry cash and leave my plastic at home, making it difficult to spend my money. Having cash on hand forces me to think twice before deciding on that pick-me-up coffee or t-shirt from the Banana Republic. I’d have to suffer the loss of Benjamins leaving my grasp.

#4. Make them unsatisfying

To make bad habits stay in the past, we must make them unsatisfying to indulge in. Clear recommends seeking out an accountability partner or even making a habit contract. In choosing an accountability partner, a trusted friend or family member may be a good option. Ask them to check in on you periodically. Simply knowing you have someone who is genuinely concerned for your financial well-being could motivate you to stay on the path.

And let’s not forget Clear’s mantra – every action you take is a vote for the type of person you want to become: Every time you deny yourself that Kohl’s shopping trip or brew your own coffee at home or choose water over soda, you’re saying to yourself “I’m the type of person who is wise with their money. I’m the type of person who would rather take the trail less traveled.”

Tell us, what are some ways you’ve broken free from bad money habits? We’d love to hear your ideas!